Onchain Capital

Definition ∞ Onchain capital refers to financial resources that are held and managed directly within blockchain protocols or decentralized applications. This capital is native to the blockchain ecosystem, operating without reliance on traditional financial intermediaries. Its deployment and management are governed by smart contracts and the underlying protocol’s rules, offering transparency and programmability.
Context ∞ The management and allocation of onchain capital are critical considerations for the growth and sustainability of decentralized finance (DeFi). News frequently reports on the total value locked (TVL) in various DeFi protocols, which serves as a proxy for the amount of onchain capital being utilized. Discussions also focus on the mechanisms for attracting and retaining this capital, such as yield generation and governance incentives.